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Standardized Unexpected Earnings (SUE)

Standardized unexpected earnings is a means of comparing earnings surprise to the company’s track record of earnings surprise. For example, Cisco was once said to consistently beat earnings estimates by a penny. Thus, if the company did beat by a penny it was hardly unexpected. A method frequently used in academic research to adjust for this factor is the standardized unexpected earnings, or SUE.

SUE = the earnings surprise at a given time divided by the standard deviation of earnings surprises measured over some historic period such as the previous 20 quarters.

Consider a stock that had a $0.03 earnings surprise, and that the standard deviation of past earnings surprises is $0.05. The surprise is smaller than normal, and the standardized earnings surprise would be $0.03/$0.05 = 0.6.

For more information, see all articles on: Investing in Stocks, Momentum Strategies, Technical Analysis, Valuation

See also:
  • Scaled Earnings Surprise
  • Normalizing Price to Earnings Ratio for Business Cycle Effects
  • Adjusted Earnings Yield
  • Earnings per Share (EPS)
  • Residual Income
    • Technical Analysis Explained : The Successful Investor's Guide to Spotting Investment Trends and Turning Points

    The Intelligent Investor: The Classic Text on Value Investing

    Financial Statement Analysis: A Practitioner's Guide, 3rd Edition

    Managing Investment Portfolios: A Dynamic Process (CFA Institute Investment Series)

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